LETTERS: The United States (US) dollar has appreciated to a level not seen for over last three decades. This meteoric rise of the dollar is relative to other world currencies.
Be that as it may, the US has to keep its eyes peeled on macroeconomic situations in other countries, as there will be repercussions since the US does not live in isolation.
The persistent rise in inflation, which is the present nightmare for Americans, is at 8.5 per cent and the rising dollar value is helping to ameliorate the deleterious impacts of inflation.
Meanwhile, Russia, in retaliation to sanctions imposed by the US and its allies, is weaponising gas supplies to Europe by closing the taps at the Nord Stream pipeline.
This drastic move by Russia has caused sky-high energy prices for Europeans. The inflation rate of the Eurozone is at 9.1 per cent which tops even the US inflation rate. England is not exempted either.
Relative to the Euro and the Pound Sterling, the US dollar soared due to the disruption of the oil supply, yet this surge is a double-edged sword.
Although the US dollar may have an anti-inflationary impact domestically, it could cause global inflation which can deteriorate global stagflation and increase debt problems in third world economies.
There would be strangulation in the free flow of goods across borders, greater political disturbances in fragile economies and greater geopolitical conflicts.
The fallout from all these would be ultimately detrimental to the US economy itself.
There would be diminished demand for its exports (they would be inordinately expensive) compounded by uncertain supply chains and enhanced national security concerns.
Although a strong dollar helps the US to reduce imported inflation, it may destabilise the global economy that is already struggling to find its feet given the repercussions of declining growth and high inflation post-Covid-19.
The US should not try to keep aloof from the rest of the world, but provide the leadership in acting in sync with allies on policies to manage the scale and scope of damage to the global economy.
It should not be oblivious to the soaring dollar, but act positively to contain its exuberance for the benefit of everyone in the world economy.
Dr A SOORIAN
Seremban, Negri Sembilan
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times